Fico Sports Inc Pte Ltd v Thong Hup Gardens Pte Ltd

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 17 August 2010
• Neutral Citation: [2010] SGHC 237
• Date: 17 August 2010
• Docket Number: Suit No 151 of 2009
• Published date: 27 August 2010
• Plaintiff Counsel: Jude P Benny and Kang Kim Yang (Joseph Tan Jude Benny LLP)
• Hearing Date: 10 February 2010,19 April 2010,11 February 2010,17 February 2010,12 February 2010,09 February 2010,08 February 2010,18 February 2010
• Defendant Counsel: Tan Teng Muan and Loh Li Qin (Mallal & Namazie)
• Court: High Court (Singapore)
• Subject Matter: LANDLORD AND TENANT,CONTRACT

Judith Prakash J: Introduction

This is a tenancy dispute. The defendant, Thong Hup Gardens Pte Ltd (“THG”), is the head tenant of a plot of land situated at Jurong West Street 25 with an estimated area of 116, 600 square metres (“Plot 2”) which it rented from The Government of the Republic of Singapore represented by The Housing and Development Board (“HDB”) pursuant to a tenancy agreement made on 21 July 2005 (“the Head Lease”).

The plaintiff, Fico Sports Inc Pte. Ltd. (“Fico”) is THG’s sub-tenant in respect of a portion of Plot 2 having an area of 40,000 square metres (“the Premises”) as described in the lease dated 6 February 2006 (“the Sub-Lease”) between THG and Fico. Following disputes that arose in the course of the Sub-Lease, the parties entered into a settlement agreement dated 11 March 2008 (“the Settlement Agreement”).

This action was started by Fico in February 2009. The main reliefs that it seeks are as follows: (a) A mandatory injunction or an order for specific performance of the Sub-Lease read with the Settlement Agreement such that THG by its directors or authorised signatories are to endorse on to the plans and other documents relating to sub-lettings, change of use applications and additions and alterations works (“A&A works”) by Fico in respect of the Premises and either return the said plans and documents to Fico or forward them to the relevant HDB department for approval within 3 days of this order or, in respect of future applications to HDB, within 7 days after receiving them from Fico; (b) A declaration that Fico shall be entitled to its rights under clause 4 of the Sub-Lease and that THG shall, upon the grant of the extension of the Head Lease, execute a further lease with Fico according to the said clause 4; (c) Damages; and (d) Further or alternatively, damages for misrepresentation pursuant to s 2 of the Misrepresentation Act (Cap 390, 1994 Rev Ed).

THG resisted Fico’s suit on the basis that it was Fico and not itself that was in breach of contract. THG mounted a counterclaim and seeks the following reliefs: (a) A declaration that Fico has committed a fundamental breach of the Sub-Lease entitling THG to terminate the Sub-Lease forthwith or, alternatively, a declaration that Fico committed a repudiatory breach of the Sub-Lease entitling THG to terminate it, forthwith; (b) Further or alternatively, a declaration that the Sub-Lease has been terminated; (c) An order that Fico deliver up vacant possession of the Premises forthwith; and (d) Further or alternatively, damages to be assessed for the breaches committed by Fico.

Background

THG is in the business of horticulture. At all material times, it was run by Mr Toh Thong Hup (“Mr Toh”) and his daughter Toh Gek Hoon (“Joey Toh”). Fico was incorporated in December 2005 to carry on the business of acquiring, developing, and leasing sports facilities. It has several directors but the persons who represented the company in its dealings with THG were Mr Lau Nam Foong Gary (“Mr Lau”) and his wife, Mdm Fiona Loy (“Fiona Loy”).

In April 2005 THG learnt that the Government of Singapore, through the HDB, was offering by way of public tender to let out two parcels of land at Jurong West Street 25 for short term or interim uses. The tender papers specified that the uses to which a successful tenderer could put the parcels of land were: (a) Turf production; (b) Nursery (including tree/plant storage); (c) Sports ground; and (d) Adventure training ground. However, at least half of each parcel of land had to be put to a non-agricultural use.

THG put in a bid for the second plot of land, Plot 2, which had an area of 116,600 square metres, and offered to pay rent of $12,826.00 a month or 11 cents per square metre. By letter dated 8 July 2005, HDB notified its acceptance of THG’s bid. THG’s intention at that stage was to use half of Plot 2 for the purposes of a nursery and to construct football pitches and badminton courts on the other portion.

At about this time, Mr Lau made contact with THG. At a meeting with Mr Toh and Joey Toh in July 2005, Mr Lau informed them that he wanted to take a sub-lease of part of Plot 2 in order to carry on sporting activities, particularly tennis. There were several meetings between the parties thereafter and the accounts of what were discussed at these meetings vary somewhat. It is Fico’s position that from the outset Mr Lau had made it clear to THG that it was absolutely crucial for Fico’s business to succeed that it be able to have food and beverage facilities (which Fico referred to as “F&B”) with cooking and eating-in at its business premises.

Mr Lau testified that, on or about 11 October 2005 he had given Mr Toh a presentation regarding the business that Fico would carry on at Plot 2 and had given examples of the projected use of retail shops on the Premises. These included fast food outlets and seafood restaurants. Mr Lau said that he had had a discussion with Mr Toh after the presentation during which Mr Toh had told him that there would be no problem for part of the Premises being used for F&B with cooking and eating-in.

Mr Toh denied this allegation. He stated that at no time during his meeting with Mr Lau was there any conversation about F&B outlets being set up in the Premises. He did recall a meeting at HDB’s office attended by Mr Lau, Joey Toh and Mr Toh himself in October 2005. At that meeting, Mr Lau had asked HDB about the provision of F&B facilities on the Premises. The HDB officer, one Mr Goh Choon Ngwen, informed Mr Lau that only drinks and snacks could be served at the Premises. Mr Toh categorically stated in his affidavit that he had never told Mr Lau that any part of Plot 2 could be used for food & beverage with cooking and eating-in. The allegation that he had induced Mr Lau to enter into a tenancy agreement by representing that the Premises could be used for F&B with cooking and eating-in at the Premises was a blatant lie.

Shortly after THG’s first meeting with Mr Lau, the tenancy agreement in respect of Plot 2 was signed and dated 21 July 2005. Clause 1.1 of the Head Lease provided that the term of the lease would be “three + three + three years” from 1st August 2005. It was later clarified by the parties that this provision meant that the original term of the lease was a period of three years only but that the HDB could renew the grant of the lease for up to two further periods of three years each. Clause 4.1.1 of the Head Lease set out the approved use of Plot 2 in the same terms as stated in the tender. The Head Lease also contained the following material terms: (a) Clause 4.2.5 – THG was not permitted to erect or put up any structure on Plot 2 without the prior written consent of HDB; (b) Clause 4.2.6 – THG was not to undertake any addition or alteration works without the prior written approval of HDB and the relevant authorities and also had to engage competent professionals to submit plans, drawings and calculations to the relevant authorities in the event that HDB gave their consent and before the works could be proceeded with; and (c) Clause 7.1 – at the written request of the tenant made three months before the expiration of the term, HDB could grant the tenant a further tenancy of Plot 2 for a further term of up to three years subject to new terms and conditions and the market rent prevailing at time of renewal to be decided by HDB provided that at the time of the request there had been no breach of any of the terms and conditions by the tenant.

On 11 October 2005, a letter of intent was signed by THG and Mr Lau. By this letter, THG agreed to sub-lease about 25,000 square metres of Plot 2 to Mr Gary Lau to develop a sports complex with his business partners. The letter stated that the land would be used for “Football field & tennis only (All other sport facilities are subjected to approval by HDB)”. The rental to be paid was 18 cents per square metre per month and the duration of the lease was stated to be three years plus three years plus three years “according to our master lease date and period”. I note in passing that the terms of the letter on the use of the land were consistent with Mr Toh’s evidence that Mr Lau wanted the land to develop his sports business - particularly in relation to tennis.

The letter of intent was initially drafted by Mr Lau and sent to THG for the latter’s approval. It is THG’s position that Mr Lau had a copy of the Head Lease at the time he prepared the letter of intent. Fico, however, denies this.

In November 2005, THG entered into a contract with a firm of professional engineers and consultants called HSK & Associates (“HSK”) and subsequently submitted to HDB a set of plans that HSK had drawn up in respect of THG’s intended use of Plot 2. HSK, pursuant to a separate appointment by Mr Lau, additionally drew up plans for the use of the Premises which were also submitted to the HDB by THG. Fico’s plans included a structure bearing the description “Single-Storey Shop with Ancillary Office and Changing Room (Blk 3)” (hereinafter called “Block 3”) which contained 19 units some of which were marked “Shop (F&B)”. Whilst Fico’s allegation was that its requirements and plans were incorporated by THG in its master plan which were then submitted to the HDB, THG took the position that Fico had instructed HSK in respect of the drawings needed for the structures to be put up on the Premises and that THG was never involved in instructing HSK regarding Fico’s drawings. Eventually, because THG was the head lessee, HSK put the respective parties’ submissions together and forwarded them to the competent authorities for approval.

Fico was incorporated in December 2005. In February 2006, the Sub-Lease was entered into by the parties. The document was drafted by Mr Lau and vetted by Joey Toh. The material terms of the Sub-Lease are as follows:

(a) The term of the

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